The economy has continued its moderate recovery from the March 2011 earthquake and tsunami, the government said Thursday, maintaining its monthly assessment while upgrading its evaluation of some components, including exports.
The economy “is still picking up slowly, while difficulties continue to prevail due to the Great East Japan Earthquake,” the Cabinet Office said in its report for April, employing the same expression for the sixth straight month.
“Reflecting the effects of policy measures, a picking up trend in the Japanese economy is expected to take hold,” it said, although underscoring some downside risks such as the eurozone sovereign debt crisis, rising crude oil prices and a possible further global economic slowdown.
While leaving unchanged its evaluations of most of the 14 components, the office upgraded its assessments of exports and the housing market while downgrading its view on imports.
“Exports level off,” the report said after judging them as “weakening recently” the previous month, on a recovery in shipments of some products, such as vehicles to the United States. But a Cabinet Office official said exports are not strong enough to completely allow the economy to overcome various uncertainties.
The upgraded evaluation of housing starts was also a minor change and does not dramatically improve the outlook for the economy. Starts “show some development toward a recovery,” it said, compared with the March assessment that viewed conditions as leveling off.
This represented the housing market showing some firmness, or “unlikeliness of (further) deterioration,” the official said.
The “leveling off” for imports marked a downward revision from the previous month’s report that said their pace of increase was slowing. This was largely due to a less sharp increase in imports of crude oil and liquefied natural gas.
Utilities have boosted LNG use for thermal power to offset the plunge in atomic power.
On other components, the report said industrial output “is still picking up slowly,” corporate capital spending “is picking up recently,” and employment conditions remain “severe.” On prices, it said recent developments “indicate that the Japanese economy is in a mild deflationary phase.”
The office also suggested that in order to upgrade the overall assessment, the government will need to see a further pickup in manufacturing activity, which was seriously affected by last year’s massive flooding in Thailand, where many Japanese carmakers and electrical machinery makers have production bases.
As for overseas economies, the report said the U.S. economy is continuing a moderate recovery while warning of a high unemployment rate and sliding house prices.